The Business Advisory Blog

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Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

Running at a loss: what to do next

Most people starting up a business need to allow for a period when they have more money going out than coming in. If you have a loan, it’s a good idea to keep an eye on your business plan to see whether you’ve allowed for a period of running at a loss and have a realistic amount of capital to keep you going through that period.

If your plans weren’t realistic enough or you’ve been hit by an unexpected downturn, you may have to consider raising further finance. Your bank manager will be looking at your cashflow forecast for three to six months ahead, to run reality checks on the kind of costs you face. Plot this out before the loan interview.

Check check check!

Check your financial records and make sure they are accurate and set up so that it is easy to keep track of income and expenses

Are your bank accounts set up so that your business bank account is only used solely for the business and there’s no bleed through to personal expenses?

Do you have a separate account to put aside taxes and levies?

Check your invoicing. Are you on top of your debtors, invoicing work on completion and chasing up late payers?

What does your budget look like? Have you set one and are you on track with it?

Take a look at your expenses. Are there any you can trim? Is it possible to approach your creditors and set up time payment arrangements?

Professional advice – who can help?

Lastly, are you trying to do all of this yourself? We understand that when money is tight, calling on a professional advisor might seem like a luxury you can’t afford right now. However, sometimes you can’t afford not to.

What do you do when you’ve been through all your incomings and outgoings for the quarter and you’re running at a loss? It can give you the flutters but it’s not uncommon for business owners to find themselves in this position, particularly in the start-up phase. It can also accompany a growth spurt in the business before the business has really stabilised at its growth targets.

If anything described above rings alarm bells but you just don’t know how to fix it, please let us know on 09 520 9200. Alliotts can help you put together a plan of action.